Suppose an Individual Demand Curve Is Given by P =

question 39

Multiple Choice

Suppose an individual demand curve is given by P = 100 - 5Q, where P is the price of cigarettes ($/pack) and Q is the quantity she consumes (packs/week) .Assuming her income per week is $1,000 and the current price of cigarettes is $5 per pack, by how much will her consumer surplus decline if the price of cigarettes increased to $10/pack?

• A)$92.5
• B)$810
• C)$950
• D)$25

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Definitions:

Holding Cost Rate

The cost associated with keeping inventory in storage, including warehousing, insurance, depreciation, and opportunity costs, usually expressed as a percentage of inventory value per unit of time.

Economical

Pertaining to the efficient use or management of resources to achieve a goal without wasteful expenditures.

Inventory Held

Refers to the stock of goods or materials that a company keeps on hand to meet demand.

Daily Sales Rate

The average amount of sales generated per day over a specific period of time.